The present invention relates to providing an optimization system for creating a promotional event calendar.
In businesses, prices of various products must be set. Such prices may be set with the goal of maximizing profit or demand or for a variety of other objectives. Profit is the difference between total revenue and costs. Total sales revenue is a function of demand and price, where demand is a function of price. Demand may also depend on the day of the week, the time of the year, the price of related products, location of a store, and various other factors. As a result, the function for forecasting demand may be very complex. Costs may be fixed or variable and may be dependent on demand. As a result, the function for forecasting costs may be very complex. For a chain of stores with tens of thousands of different products, forecasting costs and determining a function for forecasting demand are difficult. The enormous amounts of data that must be processed for such determinations are too cumbersome even when done by computer. Further, the methodologies used to forecast demand and cost require the utilization of non-obvious, highly sophisticated statistical processes.
It is desirable to provide an efficient process and methodology for determining the prices of individual products such that profit (or whatever alternative objective) is optimized.
Many retailers plan promotional event calendars with various types of promotional events. For example, a retailer may plan to have the promotional events of prominently displaying two products twice a week, running an advertisement section once a week, and having some type of discount price sale once every two weeks. Manufacturers and wholesalers often make offers to retailers. Offers are deals that manufacturers and wholesalers offer retailers as a means to induce them to promote their products in their stores. Such offers may be rebates, providing a percentage off of a certain volume of sales, or other such incentives. The manufacturer and wholesaler may provide conditions that a retailer must satisfy before the retailer is able to benefit from the offer. These conditions may cause additional costs to the retailer.
The matching of various promotional events, various manufacturer and wholesaler offers, and various manufacturer and wholesaler conditions and their costs may provide a large number of possible combinations, which may have a variety of outcomes.